More Homeowners Refinancing to Shorter Mortgages

As mortgage interest rates dangle near record lows, more homeowners are doing away with their 30-year loans in favor of shorter alternatives, reports the L.A. Times. And when you can get away with a seven-year fixed-rate mortgage for just 3 percent, why not? That is, provided you have the cash to take advantage of this rare opportunity.

Want to refinance into a seven-year fixed-rate mortgage at 2.99 percent? Or how about 10 or 15 years fixed in the mid-3 percent range?

These may sound suspiciously like teaser quotes, with tricks in the fine print, but they are in fact signs of an important shift among American homeowners: Not only have they been refinancing at a robust pace in recent weeks, but they're dialing down on the remaining number of years that they plan to pay on their mortgages.
Freddie Mac chief economist Frank Nothaft calls the shift to shorter terms "a very strong trend." In his company's latest quarterly survey of refinancers, more than 1 in 3 borrowers who ditched their 30-year fixed-rate loans opted to replace them with 15-year or 20-year mortgages at near-record low rates.